Yucapia V Lantern Proposed SAC

E HIBIT A
Proposed Second Amended Complaint
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1 GIBSON, DUNN & CRUTCHER LLP
ROBERT KLYMAN, SBN 142723
2 rklyman@gibsondunn.com
PERLETTE MICHÈLE JURA, SBN 242332
3 pjura@gibsondunn.com
SHANNON MADER, SBN 235271
4 smader@gibsondunn.com
MATTHEW T. SESSIONS, SBN 307098
5 msessions@gibsondunn.com
333 South Grand Avenue
6 Los Angeles, CA 90071-3197
Telephone: 213.229.7000
7 Facsimile: 213.229.7520
8 LILLIS PITHA LLP
DAMIEN P. LILLIS, SBN 191258
9 dlillis@lp-lawyers.com
MARTIN L. PITHA, SBN 192447
10 mpitha@lp-lawyers.com
465 California Street, 5th Floor
11 San Francisco, CA 94104
Telephone: 415.814.0405
12 Facsimile: 415.217.7011
13 Attorneys for Plaintiff
THE YUCAIPA COMPANIES, LLC
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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FOR THE COUNTY OF LOS ANGELES
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CENTRAL DISTRICT – STANLEY MOSK COURTHOUSE
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THE YUCAIPA COMPANIES, LLC, CASE NO. BC713894
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Plaintiff, SECOND AMENDED COMPLAINT FOR:
19 1 BREACH OF ORAL CONTRACT
v. 2 BREACH OF IMPLIED IN FACT
20 CONTRACT
LANTERN ASSET MANAGEMENT 3 BREACH OF RITTEN CONTRACT
21 GP, LLC; LANTERN 4 PROMISSORY ESTOPPEL
ENTERTAINMENT LLC; LANTERN 5 FALSE PROMISE
22 CAPITAL PARTNERS LP; AND DOES 1 6 INTENTIONAL
TO 10, MISREPRESENTATION
23 7 FRAUD IN THE INDUCEMENT TO
Defendants. CONTRACT
24 8 FRAUD
NEGLIGENT MISREPRESENTATION
25 1 VIOLATIONS OF CALIFORNIA
UNFAIR COMPETITION LA , CAL
26 BUS PROF CODE 172 ET SE
11 UNJUST ENRICHMENT
27 12 UANTUM MERUIT
13 BREACH OF THE COVENANT OF
28 GOOD FAITH AND FAIR DEALING
CONFIDENTIALITY AGREEMENT
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SECOND AMENDED COMPLAINT

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1 14 BREACH OF THE COVENANT OF
GOOD FAITH AND FAIR DEALING
2 YUCAIPA LANTERN DEAL
15 DECLARATORY RELIEF
3 CONFIDENTIALITY AGREEMENT
16 DECLARATORY RELIEF
4 YUCAIPA LANTERN DEAL
5 JURY TRIAL DEMANDED
6 ASSIGNED FOR ALL PURPOSES TO:
The Hon. Steven Kleifield
7 Department 57
8 Action Filed: July 16, 2018
Trial Date: January 13, 2020
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1 Plaintiff, The Yucaipa Companies, LLC (“Yucaipa”), by and through its attorneys, Gibson,
2 Dunn & Crutcher LLP, for its Second Amended Complaint against Defendants Lantern Asset
3 Management GP, LLC, Spyglass Media Group, LLC (f/k/a Lantern Entertainment LLC), Lantern
4 Capital Partners LP (collectively, “Lantern”), Andy Mitchell, and Milos Brajovic (collectively, with
5 Lantern, the “Defendants”) hereby alleges:
6 PRELIMINARY STATEMENT
7 1. This is an action to hold Defendants accountable for the breaches of contract, fraud,
8 false and misleading representations and omissions, and unfair business practices that they
9 perpetrated against Yucaipa to take advantage of Yucaipa’s efforts to salvage The Weinstein
10 Company (“TWC”) in the wake of the shocking revelations about Harvey Weinstein’s misconduct,
11 which sent TWC into a tailspin. While Yucaipa took the lead in trying to assemble a deal that would
12 save the company from bankruptcy and ensure that Harvey Weinstein’s victims and TWC’s lenders
13 and creditors would adequately be compensated, Defendants exploited Yucaipa’s extensive industry
14 knowledge and relationships in order to secure a winning bid for TWC’s assets in bankruptcy based,
15 inter alia, on the false promise that Yucaipa would be permitted to invest in the successor entity, that
16 its fees and expenses would be reimbursed, and that it would pay Yucaipa a transaction fee. In fact,
17 Defendants never honored, and never intended to honor, their promises to Yucaipa after Lantern
18 acquired TWC’s assets in bankruptcy, and now they falsely claim that they made no such promises.
19 Defendants’ fraud and contractual breaches have cost Yucaipa millions of dollars in damages and
20 have enabled Defendants to realize millions of dollars in ill-gotten gains, in addition to harming
21 numerous non-parties.
22 2. Lantern is a Dallas-based private equity firm with no prior experience in the
23 entertainment industry. In 2016, Lantern’s founder, CEO, and Managing Partner, Andy Mitchell,
24 described its investing philosophy as follows: “We like companies that we can understand . . . You
25 should always invest in a company that a fool can run, because eventually one may. So we try to
26 look at businesses that we can get our head around, that aren’t completely dependent on intellectual
27 property and asset-light type structures, that really have a business model that we can understand.” In
28 2017, contrary to its investing philosophy, Lantern began exploring a deal to purchase TWC a
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1 Hollywood studio composed primarily of intellectual property. Having no experience or
2 relationships in the entertainment industry, Mitchell, along with Lantern’s Managing Director, Milos
3 Brajovic, had to “get [their] head around” how a movie studio runs and makes money. In order to
4 understand the business and have the opportunity to invest in a Hollywood studio, Mitchell and
5 Brajovic reached out to Yucaipa, a leading investment company with deep experience and extensive
6 relationships in the industry.
7 3. Defendants learned that Yucaipa was putting together a deal to acquire TWC’s assets
8 outside of bankruptcy, and they aggressively fought to be part of the deal and pledged to invest
9 millions of dollars in the deal. After the parties signed a Confidentiality Agreement, on or about
10 November 16, 2017 (the “Confidentiality Agreement”), Yucaipa took Andy Mitchell, Milos Brajovic,
11 and Lantern under its wing, sharing confidential information and due diligence that Yucaipa spent
12 millions of dollars in developing. Yucaipa gave Defendants access to Yucaipa’s financial and legal
13 advisers, taught Defendants the basics of Hollywood business, and used its valuable relationships to
14 open doors across the industry that would have otherwise been closed to outsiders, including
15 Defendants. Unfortunately, the deal never materialized, and TWC declared bankruptcy.
16 4. Per the Confidentiality Agreement, Lantern could only use Yucaipa’s confidential
17 information (the “Yucaipa Confidential Information”) in assessing a Yucaipa-led transaction. But,
18 Defendants were set on breaking into Hollywood and struck a new deal with Yucaipa. In exchange
19 for Yucaipa authorizing Lantern’s use of, and continued access to, the Yucaipa Confidential
20 Information, including Yucaipa’s robust industry knowledge and deep industry relationships in
21 connection with a Lantern-led bankruptcy bid, Defendants promised, inter alia, to reimburse
22 Yucaipa, to pay Yucaipa a transaction fee, and to permit Yucaipa to invest in the successor entity if
23 Lantern acquired TWC’s assets in bankruptcy. Defendants reaffirmed their promises on multiple
24 occasions.
25 5. But, like the plot twists in the Hollywood movies that Defendants hoped to invest in,
26 Defendants’ promises turned out to be lies. Around the same time Defendants were making these
27 essential promises to Yucaipa, they secretly told Lantern’s investors that Yucaipa was actually
28 excluded from their deal and that Lantern had no deal in place with Yucaipa. Notwithstanding their
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1 representations to Lantern’s investors, Defendants continued to lie to Yucaipa and milk Yucaipa for
2 information, know-how, and introductions, which eventually resulted in Defendants acquiring the
3 TWC assets through bankruptcy. Once they acquired the TWC assets, however, Defendants refused
4 to honor their promises to Yucaipa and lied about their deal.
5 6. Yucaipa brings this action to vindicate its rights under the parties’ agreements, to hold
6 Defendants accountable for their fraud and broken promises, and to recover the damages to which it
7 is entitled.
8 THE PARTIES
9 7. Yucaipa is a Delaware limited liability company with its principal place of business
10 located at 9130 West Sunset Boulevard, Los Angeles, California 90069.
11 8. On information and belief, Defendant Lantern Asset Management GP, LLC is a
12 Delaware limited liability company, with its principal place of business located at 300 Crescent
13 Court, Suite 1100, Dallas, Texas, 75201.
14 9. On information and belief, Defendant Spyglass Media Group, LLC (f/k/a Lantern
15 Entertainment LLC) is a Delaware limited liability company, with its principal place of business
16 located at 300 Crescent Court, Suite 1100, Dallas, Texas, 75201.
17 10. On information and belief, Defendant Lantern Capital Partners LP is a Texas limited
18 partnership, with its principal place of business located at 300 Crescent Court, Suite 1100, Dallas,
19 Texas, 75201.
20 11. On information and belief, Andy Mitchell is the founder and CEO of Lantern Capital
21 Partners LP, with his principal residence in Dallas, Texas. Andy Mitchell was directly involved and
22 personally participated in the tortious actions that defrauded Yucaipa. Upon information and belief,
23 Andy Mitchell hoped to gain personally from the fraud and other misrepresentations committed
24 against Yucaipa.
25 12. On information and belief, Milos Brajovic is a Partner and Managing Director of
26 Lantern Capital Partners, with his principal residence in Dallas, Texas. Milos Brajovic was directly
27 involved and personally participated in the tortious actions that defrauded Yucaipa. Upon
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1 information and belief, Milos Brajovic hoped to gain personally from the fraud and other
2 misrepresentations committed against Yucaipa.
3 13. Yucaipa is currently unaware of the true names and capacities of the defendants sued
4 herein by the fictitious names DOES 1 through 10 and therefore sues those defendants by such
5 fictitious names. Yucaipa is informed and believes, and based thereon alleges, that each of the DOE
6 defendants is responsible or liable in some manner to Yucaipa for the conduct alleged herein, and that
7 Yucaipa’s damages as alleged in this Complaint were proximately caused by such DOE defendants.
8 This Complaint will be amended to allege the true names and capacities of such fictitiously named
9 defendants once those names are ascertained.
10 14. Yucaipa is informed and believes, and based thereon alleges, that at all times herein
11 mentioned, each Defendant and each DOE was the agent, servant, subsidiary, partner, member,
12 associate, representative, employee, joint venturer, co-conspirator, or alter ego of each other
13 Defendant and each other DOE, and in connection with the conduct herein alleged, was acting within
14 the course and scope of such relationship, and that each Defendant and each DOE ratified each and
15 every act, omission, and thing done by each and every other Defendant and each and every other
16 DOE.
17 JURISDICTION AND VENUE
18 15. This Court has jurisdiction over Defendants pursuant to Section 410.10 of the
19 California Code of Civil Procedure (“CCP”).
20 16. This action falls within the unlimited civil jurisdiction of this Court because the
21 amount in controversy exceeds 25,000, exclusive of interest, costs, and attorneys’ fees, and the
22 Second Amended Complaint seeks an award of equitable relief.
23 17. enue is proper in this Court pursuant to CCP sections 395 and 395.5.
24 18. The contracts at issue in this action and the fraud, false statements, and promises that
25 led to Yucaipa entering into those contracts were made and were to be performed in Los Angeles,
26 California; Lantern, Andy Mitchell, and Milos Brajovic attended meetings in Los Angeles (including,
27 among other places, at TWC’s offices, Yucaipa’s offices, and Yucaipa’s attorneys’ offices); and the
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1 Yucaipa Confidential Information was shared with Defendants in, among other places, Los Angeles,
2 California.
3 FACTUAL BAC GROUND
4 A Y ai a Be ins Ex orin a Potentia A isition o T C’s Assets O tsi e o
5 Ban r t
6 19. Yucaipa is one of the nation’s premier investment firms. Founded in 1986 by Ron
7 Burkle, Yucaipa has established a record of creating economic value through the growth and
8 responsible development of companies. For years prior to the events at issue in this action, Yucaipa
9 has been active in the sports, media, and entertainment industries.
10 20. Prior to declaring bankruptcy in 2018, TWC was one of the largest mini-majors.
11 Founded in 2006 by Harvey and Bob Weinstein, TWC produced some of the most critically and
12 commercially successful films of the last decade, including The King’s Speech, Silver Linings
13 Playbook, The Artist, The Butler, and The Imitation Game. Through its television arm, TWC also
14 produced hit shows like Project Runway and Scream.
15 21. In October 2017, The New York Times and The New Yorker published the accounts of
16 more than 60 women who had come forward to accuse Harvey Weinstein of sexual harassment,
17 sexual assault, or rape. TWC promptly fired Weinstein, but the horrific allegations sent the company
18 into a tailspin. By mid-October, with business partners, board members, creative talent, and
19 employees fleeing the now tarnished company, TWC began exploring a sale of the company or its
20 assets.
21 22. Once it became apparent that TWC or its assets were going to be sold, Yucaipa began
22 exploring a potential acquisition of TWC’s assets. Prior to 2017, Yucaipa and its affiliates had a
23 business relationship with TWC that spanned many years, including investments in 12 major films in
24 TWC’s library, including The Iron Lady, Long Walk to Freedom, Crouching Tiger, Hidden Dragon,
25 and August, Osage County. As a result of its and its affiliates’ investments in TWC’s films, Yucaipa
26 was uniquely positioned to leverage its deep knowledge of TWC’s finances in any negotiations.
27 23. Yucaipa began conducting due diligence with respect to a potential asset sale in
28 October 2017. Given its familiarity with TWC’s film portfolio, its industry connections, and
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1 extensive knowledge of TWC’s film projects and assets and liabilities, Yucaipa was uniquely
2 positioned to value TWC’s assets and liabilities and assemble the strongest possible offer. Yucaipa
3 engaged a team of professionals, which included lawyers, consultants, and accountants, to perform
4 the due diligence. In so doing, Yucaipa incurred millions of dollars in fees.
5 24. By November 2017, Yucaipa had started intensive negotiations with TWC for a
6 Yucaipa-backed acquisition company, consisting of a consortium of investors, called Mediaco
7 Acquisition LLC (“Mediaco”) to acquire the TWC assets. The potential Mediaco acquisition planned
8 to set aside money for restitution to Harvey Weinstein’s victims, pay off creditors and lenders, keep
9 most of the company and its employees intact, and install a majority female-led board and female
10 CEO. The agreement always contemplated that Mediaco would acquire TWC’s assets outside of a
11 TWC bankruptcy, and never contemplated that the acquisition would occur in a TWC bankruptcy
12 proceeding.
13 B Y ai a A rees to A o Lantern to Invest in Me ia o, an Y ai a an Lantern Enter
14 into the Con i entia it A ree ent
15 25. In November 2017, after being aggressively pursued by Lantern, Andy Mitchell, and
16 Milos Brajovic, Yucaipa agreed to allow Lantern to invest in Mediaco and participate in the potential
17 acquisition of TWC’s assets. As part of the agreement, Lantern agreed to invest 50 million into
18 Mediaco, while Yucaipa agreed to contribute, into Mediaco, cash as well as its affiliates’ already-
19 existing respective financial interests in TWC (including the investments described above), raise
20 additional equity investment, and secure any debt financing that would be necessary for the
21 acquisition. Lantern agreed that Yucaipa would receive a two percent fee of the then-projected
22 purchase price for the TWC assets in exchange for these and other deal sponsor services.
23 26. Unlike Yucaipa, Lantern had no experience in the media and entertainment industries
24 and had never done business with TWC. Accordingly, Yucaipa required Lantern to enter into the
25 Confidentiality Agreement, which would govern Lantern’s use of the Yucaipa Confidential
26 Information. Yucaipa and Lantern entered into the Confidentiality Agreement on or about November
27 16, 2017. A true and correct copy of the Confidentiality Agreement is attached hereto as Exhibit 1.
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1 27. The Confidentiality Agreement limited Lantern’s use of the Yucaipa Confidential
2 Information to its evaluation of the “Transaction,” which was defined as “a potential transaction (the
3 Transaction’) which is currently being pursued by [Yucaipa]. . . .” Lantern agreed that “it will use
4 all Confidential Information solely for the purpose of its evaluating the Transaction.” In other words,
5 Lantern agreed not to use the Yucaipa Confidential Information in connection with any other bid for
6 the TWC assets other than the then-current Yucaipa-led transaction, unless otherwise consented to by
7 Yucaipa.
8 C Y ai a Shares Its Con i entia In or ation ith Lantern as Part o the Transa tion
9 28. Prior to the execution of the Confidentiality Agreement, Yucaipa (a) accumulated an
10 enormous amount of confidential information regarding TWC and its individual assets (such as the
11 TWC film library), outstanding liabilities, and potential litigation and (b) employed lawyers,
12 consultants and accountants to analyze the Yucaipa Confidential Information, including developing
13 financial models and budgets for the operations of TWC once acquired by Mediaco. Lantern knew
14 and understood that Yucaipa’s models and budgets and other work product generated by the
15 professionals retained by Yucaipa were covered by the Confidentiality Agreement.
16 29. From November 2017 to the end of February 2018, Yucaipa conducted additional
17 extensive due diligence, negotiated the terms of a draft purchase agreement, facilitated the valuation
18 of TWC’s library, analyzed critical legal issues, arranged for essential tax diligence, and negotiated
19 financing terms with lenders. Yucaipa allowed Lantern to participate and/or benefit from its many
20 meetings, included Lantern on emails with Yucaipa’s financial and legal advisors and provided
21 Lantern with intimate details related to the potential acquisition that it would not have had access to
22 without Yucaipa. Yucaipa permitted Andy Mitchell and Milos Brajovic to participate in telephonic
23 and in-person meetings in Los Angeles with TWC and Yucaipa’s attorneys, as well as meetings with
24 Yucaipa’s financial advisors. Yucaipa also permitted Lantern to attend highly sensitive meetings
25 with the New York Attorney General (the “NY AG”) and others.
26 D A ter Ex orin Other Potentia Bi ers, T C De i es to Move For ar ith Me ia o
27 30. On or about October 26, 2017, TWC engaged Moelis & Company (“Moelis”), a well-
28 respected distressed asset consulting firm, to solicit bids for TWC’s assets. Through its efforts,
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1 Yucaipa was able to beat out 44 other potential buyers, putting Yucaipa and, by extension, Lantern in
2 the driver’s seat of any potential acquisition. In January 2018, TWC and Moelis decided to move
3 forward with Mediaco’s proposal, concluding that Mediaco’s proposal presented the only real
4 opportunity for a sale of TWC’s assets outside of bankruptcy. Accordingly, on or about January 22,
5 2018, TWC entered into a 20-day exclusivity agreement with Mediaco (the “Exclusivity
6 Agreement”). Under the Exclusivity Agreement, TWC agreed not to market the company’s assets for
7 20 days to any other bidder.
8 31. On February 11, 2018, the last day of the exclusivity period, the NY AG filed suit
9 against TWC in New York state court for damages allegedly arising out of the sexual assault
10 allegations against Harvey Weinstein (the “NY AG Lawsuit”). The complaint raised the possibility
11 of an injunction blocking the sale of TWC’s assets. Because of the NY AG Lawsuit, TWC and
12 Mediaco could not reach a deal in the 20 days provided for in the Exclusivity Agreement.
13 E Lantern De i es to Bi or T C Assets in Ban r t ,Y ai a an Lantern Enter into
14 a Ne A ree ent A o in Lantern to Use Its Con i entia In or ation
15 32. Following the expiration of the 20-day exclusivity period, Yucaipa and Lantern began
16 discussing an alternative deal that would enable Lantern to use the Yucaipa Confidential Information
17 in connection with Lantern’s own bid for TWC’s assets in bankruptcy.
18 33. As set forth above, Yucaipa had obtained a deep understanding of TWC’s assets
19 through its prior dealings with TWC and through its diligence and negotiations in connection with the
20 Mediaco Purchase Agreement, but had no intention of bidding for TWC’s assets in bankruptcy. In
21 stark contrast, Lantern desired to acquire TWC’s assets in bankruptcy and wished to be the “stalking
22 horse” bidder,1 but lacked Yucaipa’s deep understanding of TWC’s assets, and without Yucaipa
23 would have never been in the position to meaningfully bid on the assets in bankruptcy or otherwise.
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In bankruptcy auctions, the stalking horse bidder is the bidder whose bid is accepted by the debtor
in bankruptcy and is used as the baseline for all other bidders in a bankruptcy sale process. In
26 exchange for setting the floor price for the assets in that process, the stalking horse bidder
typically obtains a break-up fee and expense reimbursement in the event the debtor accepts a
27 higher or better bid. Beyond the break-up fee and expense reimbursement, the stalking horse
bidder also receives certain advantages in the sale process. Because of the foregoing, the stalking
28 horse bidder needs to have an excellent understanding of the value of the assets for which it is
bidding and limited contingencies to the closing of its bid.
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1 Under the Confidentiality Agreement, however, Lantern could use the Yucaipa Confidential
2 Information only in connection with a Yucaipa-led transaction. As such, Lantern needed Yucaipa’s
3 consent to use the Yucaipa Confidential Information in connection with a specific non-bankruptcy
4 Lantern-led bid for the TWC assets in a TWC bankruptcy case.
5 34. Recognizing that the Yucaipa Confidential Information would give it a massive
6 advantage in any bid for TWC’s assets, Lantern sought Yucaipa’s agreement that Lantern could use
7 the Yucaipa Confidential Information to develop Lantern’s bid. Finally, in late February/early March
8 2018, Yucaipa, through Ira Tochner, and Lantern, through Milos Brajovic and Andy Mitchell,
9 reached an oral agreement (the “Yucaipa/Lantern Deal”) that Lantern could use the Yucaipa
10 Confidential Information and that Yucaipa would continue to provide Lantern with access to the
11 Yucaipa Confidential Information, including access to Yucaipa’s attorneys and financial advisors, to
12 enable Lantern to prepare its bid. The Yucaipa/Lantern Deal was expressly subject to and dependent
13 on the following conditions:
14 a. If Mediaco successfully acquired the TWC assets outside of a TWC
15 bankruptcy, Lantern would have the opportunity to invest 50 million in Mediaco;
16 b. If an acquisition would only occur through a TWC bankruptcy, Yucaipa would
17 under no circumstance be a bidder. Instead, assuming Lantern successfully acquired the TWC assets
18 through a TWC bankruptcy sale, Lantern agreed to provide Yucaipa with the following rights in
19 exchange for Yucaipa authorizing Lantern to use the Yucaipa Confidential Information in connection
20 with a Lantern-led transaction for the TWC assets:
21 i) Lantern would pay Yucaipa a transaction fee, equal to two percent of
22 the then-projected purchase price for the TWC assets;
23 ii) Yucaipa had the opportunity, but not the requirement, to invest in the
24 Lantern investment vehicle. That investment would consist of Yucaipa’s and its affiliates’ respective
25 preexisting financial interest in TWC (in the form of receivables and motion picture investments). In
26 return, Yucaipa would receive an equivalent equity interest in the Lantern acquisition vehicle, and
27 Yucaipa would have the right to invest up to 50 million of additional capital post-closing;
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1 iii) Lantern would reimburse Yucaipa’s fees and expenses in connection
2 with the Mediaco Purchase Agreement; and
3 iv) Lantern would reimburse Yucaipa’s expenses in developing the
4 Yucaipa Confidential Information that Yucaipa made available to Lantern.
5 35. The Yucaipa/Lantern Deal was reaffirmed on multiple occasions by Andy Mitchell,
6 Milos Brajovic, and Lantern, and terms are reflected in internal Lantern communications as well as
7 Lantern’s actions and deeds.
8 36. A few of Defendants’ internal communication evidencing the Yucaipa/Lantern Deal
9 include:
10 On February 26, 2018, Milos Brajovic informed Andy Mitchell that Milos
Brajovic told Yucaipa “if we win, we can let Yucaipa invest.” He also told
11 Yucaipa, “we will honor the agreement to buy [Yucaipa’s] movie cash flows.”
In addition, he acknowledged telling Yucaipa that they would receive its 8
12 million claim related to TWC: “Yucaipa’s 8mm claim; they should recover
50c; the other 4mm we can work out some compensation particularly if Ron
13 [Burkle] helps with relationships to augment the business.” (LAN0012964).
14 On March 12, 2018, Nicolas Darsa of Lantern told Milos Brajovic that
SunTrust Bank the bank that Yucaipa introduced to Lantern and that would
15 eventually provide the funding that was critical for Lantern to secure the TWC
assets had specifically “asked if Yucaipa would be part of the deal.”
16 (LAN0013066). Nicolas Darsa “said yes,” informing Milos Brajovic that this
made SunTrust “happy.” (LAN0013066).
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On March 30, 2018, Nicolas Darsa emailed a colleague at Lantern an expense
18 breakdown of the potential purchase of TWC assets in Bankruptcy that
included paying “Yucaipa Expenses” regardless of the deal outcome and a
19 “Yucaipa Break-Up Share” if the deal did not go through. (LAN0017525;
LAN0017526).
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37. In addition to internal communications confirming the Yucaipa/Lantern Deal,
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Defendants took actions consistent with the Yucaipa/Lantern deal while Lantern pursued the stalking
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horse bid. For example, Defendants requested access to legal, financial and accountant professionals
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retained by Yucaipa in connection with TWC:
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On March 7, 2018, Milos Brajovic emailed Yucaipa “Need access to loeb
25 work... can you send them an email ” (LAN0013028). (Loeb & Loeb is a law
firm that represented Yucaipa in connection with TWC).
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On March 20, 2018, Milos Brajovic approved Lantern ice President Case
27 Killgore’s request to “reach out to Yucaipa to ask for the actual FTI work
product with the projected cash flows ” (LAN0013090).
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1 On May 21, 2018, Case Killgore of Lantern asked Yucaipa, “we’d like to
speak with E&Y related to TWC (tax related questions) but they are hesitant to
2 speak with us without getting sign-off from Yucaipa . . . . Could you send
E&Y a note so that they feel OK speaking to us ” (LAN0020130).
3
38. In addition to relying on the Yucaipa Confidential Information, Defendants continued
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to meet with Yucaipa throughout the time period Lantern was pursuing the TWC assets in order to
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facilitate Lantern’s acquisition of the TWC assets in bankruptcy.
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F T C Fi es or Ban r t an Lantern Uses the Y ai a Con i entia In or ation to
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Be o e the Sta in Horse Bi er
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39. Even after the expiration of the 20-day exclusivity period, Yucaipa continued to
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negotiate with TWC in an attempt to reach a deal to acquire TWC’s assets through Mediaco. Indeed,
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on or about March 1, 2018, TWC and Mediaco executed the Mediaco Purchase Agreement. In the
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end, however, Yucaipa was unable to resolve the NY AG’s concerns, and for that reason and others,
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on or about March 6, 2018, Mediaco terminated the Mediaco Purchase Agreement.
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40. Because no other bidder was willing to acquire TWC’s assets outside of bankruptcy,
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the termination of the Mediaco Purchase Agreement made it inevitable that TWC would be filing for
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bankruptcy. As a result of its access to the Yucaipa Confidential Information, Lantern was able to
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submit a proposal to acquire substantially all of TWC’s assets in bankruptcy (the “Lantern Bid”) on
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or about March 7, 2018 only a day after the termination of the Mediaco Purchase Agreement.
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Upon information and belief, Lantern relied extensively on the Yucaipa Confidential Information in
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developing the Lantern Bid. Shortly thereafter, TWC decided to pursue the Lantern Bid as the
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stalking horse bid.
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41. On or about March 19, 2018, TWC filed for bankruptcy (the “TWC Bankruptcy
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Case”). That same day, Lantern and TWC executed an asset purchase agreement pursuant to which
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Lantern agreed to serve as a stalking horse bidder for substantially all of TWC’s assets.
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42. Lantern continued to use Yucaipa Confidential Information throughout the TWC
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bankruptcy in support of the Lantern Bid.
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43. On or about March 20, 2018, TWC filed a motion to designate Lantern as the stalking
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horse bidder, and sought approval of bidding procedures with respect to the bankruptcy sale process.
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1 These bidding procedures included granting Lantern a substantial break-up fee and expense
2 reimbursement in the event another bidder ultimately topped Lantern’s bid.
3 44. That same day, during an in-person meeting with Yucaipa’s Ira Tochner in Beverly
4 Hills, Milos Brajovic reaffirmed the Lantern/Yucaipa Deal on behalf of Lantern. Several days later,
5 during a phone call with Tochner, Milos Brajovic admitted Lantern was in a winning position only
6 because of the information and diligence that Yucaipa shared with Lantern. On or about April 6,
7 2018, the Bankruptcy Court approved the bidding procedures and designated Lantern as the stalking
8 horse bidder.
9 G De en ants Re eate Rea ir the Y ai a Lantern Dea to In e Y ai a to
10 Contin e S ortin Lantern an Sharin Y ai a Con i entia In or ation
11 45. Defendants confirmed the Yucaipa/Lantern Deal on multiple occasions in April and
12 May 2018. For example: Milos Brajovic reaffirmed the deal at a meeting with Tochner in New York
13 on April 11, 2018; Milos Brajovic and Andy Mitchell confirmed the deal at a meeting with Burkle
14 and Tochner at Yucaipa’s office in Los Angeles on April 17, 2018; Milos Brajovic confirmed the
15 deal at a meeting with Tochner in Beverly Hills on April 27, 2018; and on or about May 6, 2018,
16 Milos Brajovic reaffirmed the deal during a phone call with Tochner. Lantern’s repeated
17 reaffirmations were designed to reassure Yucaipa that Lantern would honor its obligations and
18 convince Yucaipa to continue to abide by its agreement to provide access to the Yucaipa Confidential
19 Information. Indeed, as part of the Yucaipa/Lantern Deal and based upon Lantern’s repeated
20 reaffirmations of the deal, Yucaipa gave Lantern access to its attorneys and accountants and provided
21 Lantern guidance.
22 46. Lantern’s unparalleled access to Yucaipa’s deep industry contacts, Yucaipa’s
23 reputation in the industry, and Yucaipa’s treasure trove of confidential information was only made
24 possible by Yucaipa, which reasonably relied on the promises made to it by Lantern, Andy Mitchell,
25 and Milos Brajovic. Lantern could not have closed the transaction without access to the Yucaipa
26 Confidential Information. For example, in March 2018 Yucaipa sent Lantern the term sheets it
27 prepared for the out-of-court deal that included revisions from its counsel. Lantern used these term
28 sheets to support its efforts to obtain financing. (LAN0018362; LAN0013062).
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1 47. Neither Lantern, Andy Mitchell, nor Milos Brajovic was able to obtain financing for
2 the Lantern Bid on favorable terms. On March 10, 2018, Yucaipa stepped in to help again, and
3 recommended Lantern call a specific banker at SunTrust Bank. (LAN0017117). Lantern called the
4 banker, and then told Milos Brajovic that the banker “asked if Yucaipa would be part of the deal. I
5 said yes. He was happy.” (LAN0013066). Lantern then used the term sheet Yucaipa previously
6 negotiated as a basis for Lantern’s new term sheet. It was only after this lawsuit was initially filed
7 after SunTrust lent Lantern hundreds of millions of dollars that SunTrust learned the parties were
8 not working together. Indeed, on July 17, 2018, SunTrust forwarded Lantern a news article related to
9 this lawsuit and asked “I thought you guys were cool with Burkle ” (LAN0022617).
10 48. Relying on Defendant’s promises and representations, Yucaipa reasonably believed
11 that Lantern would follow through with its obligations under the Yucaipa/Lantern Deal. Even after
12 the proposed Mediaco transaction fell through, Defendants continued to seek Yucaipa Confidential
13 Information, conduct phone calls with Yucaipa regarding the TWC assets, send emails to Yucaipa
14 regarding the TWC assets, participate in in-person meetings with Yucaipa regarding the TWC assets,
15 request access to Yucaipa’s team of professionals regarding the TWC assets, and request other
16 assistance from Yucaipa. As a result, Yucaipa continued to share Yucaipa Confidential Information
17 with Lantern, provide industry support, conduct meetings, and provide introductions to industry
18 players. Yucaipa also forwent other investment opportunities due to its reasonable reliance on
19 Defendant’s promises.
20 49. Yucaipa reasonably relied on Defendant’s promises and actions in entering into the
21 Yucaipa/Lantern Deal.
22 H Unbe no nst to Y ai a, Lantern Never Inten e to ee Its Pro ises an De en ants
23 Intentiona Lie to A ire the T C Assets
24 50. Lantern, Andy Mitchell, and Milos Brajovic lied to Yucaipa. Because they needed
25 Yucaipa’s continued support and its confidential information, they promised that if Yucaipa
26 continued to share Yucaipa Confidential Information with Lantern to enable Lantern to pursue the
27 bankruptcy acquisition of TWC, Lantern would pay a transaction fee to Yucaipa, reimburse its
28 expenses, allow it to contribute its preexisting financial interest in TWC to the Lantern acquisition
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1 vehicle in return for an equivalent equity interest in the Lantern acquisition vehicle, and provide it the
2 option to invest in the Lantern investment vehicle after bankruptcy.
3 51. However, it is now apparent that Defendants never intended to keep their promises to
4 Yucaipa, even though Lantern entered into the Yucaipa/Lantern Deal with Yucaipa, and continued to
5 use, accept, and request access to the Yucaipa Confidential Information. Defendants intended to
6 breach their promises in order to benefit Lantern as well as to personally gain from the transaction.
7 52. Internal Lantern documents reveal that, at the same the time Lantern, Andy Mitchell,
8 and Milos Brajovic agreed to the Yucaipa/Lantern Deal, they were secretly telling Lantern’s investors
9 that Yucaipa would be excluded from any transaction. For example, on March 6, 2018, Andy
10 Mitchell informed investors that Yucaipa was not participating in the deal. (LAN0007570;
11 LAN0007902).
12 I A ter the Sa e o T C’s Assets C ose , Lantern Brea he the Y ai a Lantern Dea
13 53. On or about May 9, 2018, the Bankruptcy Court approved the sale of TWC’s assets to
14 Lantern, and on or about July 13, 2018, TWC and Lantern closed on the sale of TWC’s assets.
15 54. Shortly thereafter, Defendants informed Yucaipa that Lantern would not honor its
16 obligations under the Yucaipa/Lantern Deal despite earlier and continuous promises to the contrary.
17 55. Despite reaping enormous benefits from the invaluable assistance that Yucaipa
18 provided, Lantern has refused to honor or perform its obligations under the Yucaipa/Lantern Deal,
19 and Brajovic and Mitchell, along with Lantern, now claim that no such deal existed. Defendants do
20 so despite reaffirming the Yucaipa/Lantern Deal on multiple occasions, despite acknowledging (a) in
21 conversations with Yucaipa that its success was a direct result of the information and assistance that
22 Yucaipa provided, and (b) representing to others that Lantern had a deal with Yucaipa.
23 56. The fraud, false promises, misrepresentations and omissions, and misdeeds perpetrated
24 by Lantern, Andy Mitchell, and Milos Brajovic have left Yucaipa with no choice but to file this
25 action. Defendants’ wrongs have caused Yucaipa to suffer (and to continue to suffer) millions of
26 dollars in damages. Yucaipa brings this action to vindicate its rights under the parties’
27 Confidentiality Agreement and the Yucaipa/Lantern Deal, to hold Defendants accountable for their
28 broken promises, and to recover the damages to which it is entitled.
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1 FIRST CAUSE OF ACTION
2 Brea h o Ora Contra t
3 A ainst Lantern
4 57. Yucaipa incorporates by reference the allegations in each of the preceding paragraphs
5 as if fully set forth herein.
6 58. The Yucaipa/Lantern Deal by and between Yucaipa and Lantern is a valid and
7 enforceable contract.
8 59. Yucaipa has fully performed or tendered all performance required under the
9 Yucaipa/Lantern Deal.
10 60. Lantern has breached the Yucaipa/Lantern Deal by, among other things, stating that it
11 will not honor or perform its obligations under the Yucaipa/Lantern Deal.
12 61. As a direct and proximate result of Lantern’s breaches and wrongful conduct, Yucaipa
13 has suffered and will suffer substantial monetary damages in an amount to be determined at trial.
14 SECOND CAUSE OF ACTION
15 Brea h o I ie in Fa t Contra t
16 A ainst Lantern
18 as fully set forth herein.
19 63. In the alternative and without prejudice to Yucaipa’s claim that Lantern entered into
20 a clear and unambiguous oral agreement in the form of the Yucaipa/Lantern Deal the actions of
21 both Lantern and Yucaipa created a valid and enforceable implied-in-fact contract between Yucaipa
22 and Lantern, which Yucaipa fully performed and Lantern breached.
23 64. Yucaipa intended for Lantern to interpret Yucaipa’s actions as an agreement to enter
24 into a contract. After the prospect of a Yucaipa-led transaction became non-existent, Yucaipa’s
25 obligations under the Confidentiality Agreement expired. However, Yucaipa continued to invest
26 time and resources into supporting Lantern’s efforts to acquire the TWC assets in bankruptcy.
27 Yucaipa allowed Lantern to use the Yucaipa Confidential Information, shared additional Yucaipa
28 Confidential Information, provided guidance and support, and, among other things, made
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1 introductions to industry professionals. As seen through Yucaipa’s actions, Yucaipa intended for
2 Lantern to interpret Yucaipa’s conduct to mean that Yucaipa expected to receive benefits from
3 Lantern after it acquired TWC’s assets in bankruptcy in the form of reimbursement of fees, a closing
4 fee, and investment opportunities.
5 65. Lantern likewise intended for Yucaipa to interpret Lantern’s actions as an agreement
6 to enter into a contract. Lantern continued to seek, in the form of phone calls, emails, and in-person
7 meetings, Yucaipa Confidential Information and support from Yucaipa. Lantern knew, and had
8 reason to know, that Yucaipa would interpret its requests for and receipt of Yucaipa support and
9 Yucaipa Confidential Information to mean that Yucaipa would receive benefits in exchange in the
10 form of reimbursement of fees, a closing fee, and investment opportunities if Lantern acquired
11 TWC’s assets in bankruptcy.
12 66. Despite having successfully acquired the TWC assets in bankruptcy based on the
13 Yucaipa Confidential Information, Lantern breached the implied-in-fact contract by failing to provide
14 any benefits to Yucaipa. Lantern (a) did not pay any transaction fee, (b) did not allow Yucaipa to
15 contribute its preexisting financial interest in TWC to the Lantern acquisition vehicle in return for an
16 equivalent equity interest in the Lantern acquisition vehicle, (c) did not allow Yucaipa to contribute
17 to the Lantern investment vehicle and (d) did not reimburse Yucaipa’s expenses and fees in
18 connection with the Mediaco Purchase Agreement and development of the Yucaipa Confidential
19 Information.
20 67. As a direct and proximate result of Lantern’s breach of the implied-in-fact contract,
21 Yucaipa did not receive fair compensation for sharing its valuable Yucaipa Confidential Information,
22 or fair compensation for allowing Lantern to use the Yucaipa Confidential Information Yucaipa
23 previously obtained. Additionally, Yucaipa forwent opportunities to seek investment with other
24 entities that could have acquired the TWC assets if they had access to the Yucaipa Confidential
25 Information. Furthermore, Yucaipa spent significant fees on attorneys and other industry
26 professionals to create the Yucaipa Confidential Information that Lantern induced Yucaipa to share.
27 Yucaipa has also suffered harm to its goodwill and reputation.
28
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1 68. Yucaipa should be compensated directly for its injuries in an amount to be determined
2 at trial.
3 THIRD CAUSE OF ACTION
4 Brea h o ritten Contra t
5 A ainst Lantern Asset Mana e ent GP, LLC
8 70. The Confidentiality Agreement by and between Yucaipa and Lantern Asset
9 Management GP, LLC is a valid and enforceable contract.
10 71. Yucaipa has fully performed or tendered all performance required under the
11 Confidentiality Agreement.
12 72. Lantern Asset Management GP, LLC has breached the Confidentiality Agreement by
13 using the Yucaipa Confidential Information in connection with the Lantern Bid. Lantern was able to
14 become the successful stalking horse bidder for the TWC assets in the TWC Bankruptcy Case only
15 by using the Yucaipa Confidential Information.
16 73. As a direct and proximate result of Lantern Asset Management GP, LLC’s breach of
17 its obligations under the Confidentiality Agreement, Yucaipa has suffered and will suffer substantial
18 monetary damages in an amount to be determined at trial.
19 74. As the parties agreed in the Confidentiality Agreement, Yucaipa is also entitled to
20 injunctive relief as a direct and proximate result of Lantern’s breach.
21 FOURTH CAUSE OF ACTION
22 Pro issor Esto e
23 A ainst Lantern
26 76. As part of the Yucaipa/Lantern Deal, Lantern made a clear and unambiguous promise
27 to Yucaipa that:
28
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1 a. If Mediaco successfully acquired the TWC assets outside of a bankruptcy,
2 Lantern would have the opportunity to invest 50 million in Mediaco;
3 b. If an acquisition would only occur through a TWC bankruptcy, Yucaipa would
4 under no circumstance be a bidder. Instead, assuming Lantern successfully acquired the TWC assets
5 through a TWC bankruptcy sale, Lantern agreed to provide Yucaipa with the following rights in
6 exchange for Yucaipa authorizing Lantern to use the Yucaipa Confidential Information in connection
7 with a Lantern-led transaction for the TWC assets:
8 i) Lantern would pay Yucaipa a transaction fee, equal to two percent of
9 the then-projected purchase price for the TWC assets;
10 ii) Yucaipa had the opportunity, but not the requirement, to invest in the
11 Lantern investment vehicle. That investment would consist of Yucaipa’s and its affiliates’ respective
13 return, Yucaipa would receive an equivalent equity interest in the Lantern acquisition vehicle, and
14 Yucaipa would have the right to invest up to 50 million of additional capital post-closing;
15 iii) Lantern would reimburse Yucaipa’s fees and expenses in connection
16 with the Mediaco Purchase Agreement; and
17 iv) Lantern would reimburse Yucaipa’s expenses in developing the
18 Yucaipa Confidential Information that Yucaipa made available to Lantern.
19 77. In reliance on Lantern’s promise, Yucaipa agreed to share the Yucaipa Confidential
20 Information even though it had no obligation to do so under the Confidentiality Agreement.
21 78. Yucaipa’s reliance on Lantern’s promise was reasonable and foreseeable.
22 79. Yet after Lantern successfully acquired the TWC assets in bankruptcy based on the
23 Yucaipa Confidential Information, Lantern did not perform any of its promises: Lantern (a) did not
24 pay the transaction fee, (b) did not allow Yucaipa to contribute to the Lantern investment vehicle its
25 and its affiliates’ preexisting financial interest in TWC in exchange for an equivalent equity interest,
26 (c) did not allow Yucaipa the option to invest up to 50 million of additional capital in the Lantern
27 acquisition vehicle, and (d) did not reimburse Yucaipa’s expenses and fees in connection with the
28 Mediaco Purchase Agreement or development of the Yucaipa Confidential Information.
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1 80. Yucaipa was injured by its reasonable and foreseeable reliance on Lantern’s breached
2 promise, and an injustice can be avoided only by enforcing Lantern’s promise.
3 FIFTH CAUSE OF ACTION
4 Fa se Pro ise
5 A ainst A De en ants
8 82. As part of the Yucaipa/Lantern Deal, established late February/early March 2018, by
9 oral agreements between Defendants, and Tochner in Los Angeles, CA, Defendants made clear and
10 unambiguous promises to Yucaipa. If Lantern successfully acquired the TWC assets through a TWC
11 bankruptcy sale, Defendants made five promises to Yucaipa in exchange for Yucaipa support, which
12 included authorizing Defendants to use the Yucaipa Confidential Information in connection with a
13 Lantern-led transaction for the TWC assets:
14 a. Lantern would pay Yucaipa a transaction fee, equal to two percent of the then-
15 projected purchase price for the TWC assets;
16 b. Yucaipa had the opportunity, but not the requirement, to invest in the Lantern
17 investment vehicle. That investment would consist of Yucaipa’s and its affiliates’ respective
19 return, Yucaipa would receive an equivalent equity interest in the Lantern acquisition vehicle;
20 c. Yucaipa would have the right to invest up to 50 million of additional capital
21 post-closing;
22 d. Lantern would reimburse Yucaipa’s fees and expenses in connection with the
23 Mediaco Purchase Agreement; and
24 e. Lantern would reimburse Yucaipa’s expenses in developing the Yucaipa
25 Confidential Information that Yucaipa made available to Lantern.
26 83. Each and every one of the above promises independently constitutes a false promise.
27 84. Defendants did not intend to perform the promises when the promises were made.
28 While Defendants continued to reaffirm the existence and terms of the Yucaipa/Lantern Deal through
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1 in-person and telephonic meetings with Ira Tochner in March and April 2018, Defendants secretly
2 represented to Lantern’s investors on at least March 6, 2018, that Yucaipa was excluded from the
3 purchase of TWC assets, that Lantern had not given Yucaipa the option to invest in the Lantern
4 investment vehicle after bankruptcy, and that any participation of Yucaipa would not be discussed
5 until after Lantern acquired the TWC assets. For instance, on February 26, 2018, Milos Brajovic
6 made promises to Yucaipa (LAN0012964), and on March 6, 2018, Andy Mitchell informed certain
7 Lantern investors that Lantern told “Yucaipa we would discuss their participation after Lantern has
8 control of the deal,” even though Lantern had already entered into the Yucaipa/Lantern Deal.
9 (LAN0007570; LAN0007902).
10 85. Defendants knew that they did not intend to keep their promises to Yucaipa at the time
11 the Yucaipa/Lantern Deal was entered into, as evidenced by their representations to Lantern’s
12 investors.
13 86. In reliance on Defendants’ promises and reaffirmations of those promises, Yucaipa
14 supported Lantern’s efforts to acquire the TWC assets in bankruptcy. Further, Yucaipa did not object
15 to Lantern’s use of Yucaipa Confidential Information, and Yucaipa continued to share and provide
16 access to Yucaipa Confidential Information.
17 87. Defendants intended for Yucaipa to rely on their false promises. Defendants knew
18 that Yucaipa had no obligations to share Yucaipa Confidential Information with Defendants after the
19 Yucaipa-led transaction fell apart. At the same time, Defendants knew that continued access to the
20 Yucaipa Confidential Information and Yucaipa support was essential to the success of the Lantern
21 bid in the TWC bankruptcy.
22 88. Yucaipa’s reliance on Defendants’ promises was reasonable and foreseeable. Yucaipa
23 had no reason to believe that Defendants would not follow through on their oral promises with
24 Yucaipa. Yucaipa had not previously transacted with Defendants and had no reason to believe that
25 Defendants’ representations were false. Additionally, Defendants’ actions were consistent with their
26 promises. Defendants continued to seek Yucaipa Confidential Information, call and email Yucaipa,
27 and have in-person meetings with Yucaipa regarding the TWC assets.
28
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1 89. Defendants, however, did not perform their promises. After Lantern successfully
2 acquired the TWC assets in bankruptcy based on the Yucaipa Confidential Information, Lantern (a)
3 did not pay any transaction fee, (b) did not allow Yucaipa to contribute its preexisting financial
4 interest in TWC to the Lantern acquisition vehicle in return for an equivalent equity interest in the
5 Lantern acquisition vehicle, (c) did not allow Yucaipa to contribute to the Lantern investment vehicle
6 and (d) did not reimburse Yucaipa’s expenses and fees in connection with the Mediaco Purchase
7 Agreement and development of the Yucaipa Confidential Information.
8 90. Yucaipa was injured by its reliance on Defendants’ false promises, which were a
9 substantial factor in causing Yucaipa’s injuries. Because of Defendants’ false promises, Yucaipa did
10 not receive fair compensation for sharing its valuable Yucaipa Confidential Information and for
11 allowing Lantern to use the Yucaipa Confidential Information in preparing its bid. Additionally,
12 Yucaipa forwent opportunities to invest in other entities interested in acquiring the TWC assets. And
13 Yucaipa spent significant fees on attorneys and other industry professionals to create the Yucaipa
14 Confidential Information that Defendants fraudulently induced, via false promises, Yucaipa to share.
15 Yucaipa has also suffered harm to its goodwill and reputation.
16 91. Yucaipa should be compensated directly for its injuries in the form of compensatory
17 damages, and Defendants should be required to pay punitive damages to penalize Defendants for
18 their fraudulent conduct and deter Defendants from engaging in such conduct in the future.
19 SI TH CAUSE OF ACTION
20 Intentiona Misre resentation
24 93. In order to extract benefits from Yucaipa, Defendants intentionally misrepresented and
25 omitted material facts to Yucaipa, including but not limited to: (1) Lantern would pay Yucaipa a
26 transaction fee, (2) Lantern would allow Yucaipa to contribute its preexisting financial interest in
27 TWC to the Lantern acquisition vehicle in return for an equivalent equity interest in the Lantern
28 acquisition vehicle, (3) Yucaipa would have the opportunity to invest in the Lantern investment
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1 vehicle, and (4) Lantern would reimburse Yucaipa’s fees and expenses related to the Mediaco
2 Purchase Agreement and Yucaipa Confidential Information.
3 94. While Yucaipa acted reasonably in relying on Defendants’ intentional
4 misrepresentations and omissions, Defendants knew that their representations and omissions were
5 false. On at least March 6, 2018, Defendants reported to investors that Yucaipa was excluded from
6 the purchase of TWC assets, that Lantern had not given Yucaipa the option to invest in the Lantern
9 made representations to Yucaipa (LAN0012964), and on March 6, 2018, Andy Mitchell informed
10 certain Lantern investors that Lantern told “Yucaipa we would discuss their participation after
11 Lantern has control of the deal,” even though Lantern had already entered into the Yucaipa/Lantern
12 Deal. (LAN0007570; LAN0007902).
13 95. Defendants intended for Yucaipa to rely on their intentional misrepresentations and
14 omissions. Defendants knew that as a result of their intentional misrepresentations and omissions,
15 Yucaipa would provide Yucaipa Confidential Information and other Yucaipa support, which were
16 critical to Defendants successfully acquiring the TWC assets through bankruptcy. Defendants were
17 fully aware that Yucaipa had no obligations to support Defendants or share Yucaipa Confidential
18 Information with Defendants after the prospect of a Yucaipa-led transaction became non-existent. At
19 the same time, Defendants knew that having continued access to the Yucaipa Confidential
20 Information during the process of pursuing TWC’s assets made Defendants’ chances of success in
21 bankruptcy much higher than without the Yucaipa Confidential Information.
22 96. Yucaipa was justified in relying on Defendants’ intentional misrepresentations and
23 omissions. Yucaipa had not previously transacted with Defendants and had no reason to believe that
24 Defendants’ representations were false. Additionally, Defendants’ actions were consistent with their
25 misrepresentations and omissions. Defendants continued to seek Yucaipa Confidential Information,
26 call and email Yucaipa, and have in-person meetings with Yucaipa regarding the TWC assets.
27 97. Yucaipa was injured by its reasonable and foreseeable reliance on Defendants’
28 intentional misrepresentations and omissions. Because of Defendants’ false promises, Yucaipa did
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1 not receive fair compensation for sharing its valuable Yucaipa Confidential Information, or fair
2 compensation for allowing Defendants to use the Yucaipa Confidential Information Yucaipa
3 previously obtained. Additionally, Yucaipa forwent any opportunities to seek investment with other
4 entities that could have been interested in acquiring the TWC assets if they had access to the Yucaipa
5 Confidential Information. Furthermore, Yucaipa spent significant fees on attorneys and other
6 industry professionals to create the Yucaipa Confidential Information that Defendants fraudulently
7 induced Yucaipa to share. Yucaipa has also suffered harm to its goodwill and reputation.
11 SEVENTH CAUSE OF ACTION
12 Fra in the In e ent to Contra t
16 100. In order to induce Yucaipa to agree to the Yucaipa/Lantern Deal (or, in the alternative,
17 the implied-in-fact contract), Defendants misrepresented and omitted material facts and made false
18 promises to Yucaipa, including but not limited to: (1) Lantern would pay Yucaipa a transaction fee,
19 (2) Lantern would allow Yucaipa to contribute its preexisting financial interest in TWC to the
20 Lantern acquisition vehicle in return for an equivalent equity interest in the Lantern acquisition
21 vehicle, (3) Yucaipa would have the opportunity to invest in the Lantern investment vehicle, and (4)
22 Lantern would reimburse Yucaipa’s fees and expenses related to the Mediaco Purchase Agreement
23 and Yucaipa Confidential information.
24 101. Defendants knew that their promises and representations were false, and such
25 statements were designed to induce Yucaipa’s agreement. Shortly after Defendants made these
26 representations to Yucaipa, Defendants reported to investors that Yucaipa was excluded from the
27 purchase of TWC assets, that Lantern had not given Yucaipa the option to invest in the Lantern
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2 made representations to Yucaipa (LAN0012964), and on March 6, 2018, Andy Mitchell informed
3 certain Lantern investors that Lantern told “Yucaipa we would discuss their participation after
4 Lantern has control of the deal,” even though Lantern had already entered into the Yucaipa/Lantern
5 Deal. (LAN0007570; LAN0007902).
6 102. Defendants intended to induce Yucaipa to rely on their false promises, intentional
7 misrepresentations, and omissions. Defendants knew that as a result of these fraudulent inducements,
8 Yucaipa would agree to and perform under the Yucaipa/Lantern Deal (or, in the alternative, the
9 implied-in-fact contract), which was critical to Defendants successfully acquiring the TWC assets
10 through bankruptcy. Defendants were fully aware that Yucaipa had no obligations to share Yucaipa
11 Confidential Information with Defendants after the prospect of a Yucaipa-led transaction became
12 non-existent. At the same time, Defendants knew that having continued access to the Yucaipa
13 Confidential Information during the process of pursuing TWC’s assets made Defendants’ chances of
14 success in bankruptcy much higher than without the Yucaipa Confidential Information.
15 103. Yucaipa was reasonable and justified in relying on Defendants’ false promises,
16 intentional misrepresentations, and omissions. Yucaipa had not previously transacted with
17 Defendants prior to the pursuit of TWC and entering into the Yucaipa/Lantern Deal (or, in the
18 alternative, the implied-in-fact contract) and had no reason to mistrust Defendants. Additionally,
19 Defendants’ actions were consistent with their promises. Defendants continued to seek Yucaipa
20 Confidential Information, call and email Yucaipa, and have in-person meetings with Yucaipa
21 regarding the TWC assets.
23 fraudulent inducements to contract. Because of Defendants’ fraudulent inducement, Yucaipa did not
24 receive fair compensation for sharing its valuable Yucaipa Confidential Information, or fair
25 compensation for allowing Defendants to use the Yucaipa Confidential Information that Yucaipa
27 entities that could have been interested in acquiring the TWC assets if they had access to the Yucaipa
28 Confidential Information. Furthermore, Yucaipa spent significant fees on attorneys and other
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1 industry professionals to create the Yucaipa Confidential Information that Defendants fraudulently
2 induced Yucaipa to share. Yucaipa has also suffered harm to its goodwill and reputation.
6 EIGHTH CAUSE OF ACTION
7 Fra
11 107. Defendants made implied fraudulent promises, representations, and omissions to
12 Yucaipa to induce Yucaipa’s reliance. These implied promises, representations and omissions,
13 separately and independently included providing Yucaipa (a) a transaction fee, (b) allowing Yucaipa
14 to contribute its preexisting financial interest in TWC to the Lantern acquisition vehicle in return for
15 an equivalent equity interest in the Lantern acquisition vehicle, (c) providing Yucaipa the opportunity
16 for Yucaipa to contribute to the Lantern investment vehicle and (d) providing Yucaipa reimbursement
17 for its expenses and fees in connection with the Mediaco Purchase Agreement and development of
18 the Yucaipa Confidential Information.
19 108. Defendants’ fraudulent promises, representations, and omissions were implied by
20 their conduct. The conduct included Defendants’ repeated requests for Yucaipa Confidential
21 Information, calls and emails with Yucaipa regarding the TWC assets, participation in in-person
22 meetings with Yucaipa regarding the TWC assets, requests for access to Yucaipa’s team of
23 professionals regarding the TWC assets, and requests for other assistance from Yucaipa.
24 109. Defendants, however, knew these promises, representations, and omissions were false.
25 Defendants secretly represented to Lantern’s investors that Yucaipa was excluded from the purchase
26 of TWC assets, that Lantern had not given Yucaipa the option to invest in the Lantern investment
27 vehicle after bankruptcy, and that any participation of Yucaipa would not be discussed until after
28 Lantern acquired the TWC assets. For instance, on February 26, 2018, Milos Brajovic made
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1 promises to Yucaipa (LAN0012964), and on March 6, 2018, Andy Mitchell informed certain Lantern
2 investors that Lantern told “Yucaipa we would discuss their participation after Lantern has control of
3 the deal,” even though Lantern had already entered into the Yucaipa/Lantern Deal. (LAN0007570;
4 LAN0007902).
5 110. In reliance on Defendants’ implied promises, representations, and omissions, Yucaipa
6 shared Confidential Information and provided support to Defendants.
7 111. Defendants intended for Yucaipa to rely on the promises, representations, and
8 omissions. Defendants also knew that having continued access to the Yucaipa Confidential
9 Information and Yucaipa support during the process of pursuing TWC’s assets increased Defendants’
10 chances of success.
11 112. Yucaipa’s reliance on Defendants’ implied promises, representations, and omissions
12 made through Defendants’ conduct was reasonable and foreseeable. Yucaipa had never previously
13 transacted with Defendants and had no reason to mistrust Defendants. Additionally, Defendants took
14 actions consistent with their implied representations. Defendants continued to seek Yucaipa
18 fraudulent promises, representations, and omissions. Because of Defendants’ fraud, Yucaipa did not
19 receive fair compensation for sharing its valuable Yucaipa Confidential Information, or fair
20 compensation for allowing Defendants to use the Yucaipa Confidential Information Yucaipa
24 professionals to create the Yucaipa Confidential Information that Defendants fraudulently induced
25 Yucaipa to share. Yucaipa has also suffered harm to its goodwill and reputation.
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1 NINTH CAUSE OF ACTION
2 Ne i ent Misre resentation
6 116. In order to induce Yucaipa to provide Yucaipa Confidential Information and other
7 Yucaipa support, Defendants made negligent misrepresentations and omitted material facts in their
8 dealings with Yucaipa.
9 117. In negligently misrepresenting material facts, Defendants breached their duty to act
10 reasonably in their dealings with Yucaipa.
11 118. Yucaipa acted reasonably in relying on Defendants’ negligent representations and
12 omissions.
13 119. Defendants’ negligent representations and omissions resulted in Yucaipa providing
14 Yucaipa Confidential Information and other support, which were critical to Defendants successfully
15 acquiring the TWC assets through bankruptcy.
16 120. Yucaipa was justified in relying on Defendants’ negligent misrepresentations and
17 omissions. Yucaipa had not previously transacted with Defendants and had no reason to believe that
18 Defendants would not follow through on their representations to Yucaipa. Additionally, Defendants
19 took actions consistent with their representations. Defendants continued to seek Yucaipa
23 negligent misrepresentations and omissions of material fact. Because of Defendants’ representations,
24 Yucaipa did not receive fair compensation for sharing its valuable Yucaipa Confidential Information,
25 or fair compensation for allowing Defendants to use the Yucaipa Confidential Information Yucaipa
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1 professionals to create the Yucaipa Confidential Information that Defendants fraudulently induced
2 Yucaipa to share. Yucaipa has also suffered harm to its goodwill and reputation.
3 122. Yucaipa should be compensated directly for its injuries in an amount to be determined
4 at trial.
5 TENTH CAUSE OF ACTION
6 Vio ations o Ca i ornia Un air Co etition La , Ca B s Pro Co e 172 et seq.
7 A ainst Lantern
10 124. Lantern’s aforementioned actions constitute “unlawful” and “unfair” business
11 practices under California Business & Professions Code §§ 17200 et seq. including, but not limited
12 to, Lantern’s (i) false promises made to Yucaipa in connection with the Yucaipa/Lantern Deal (or, in
13 the alternative, Lantern’s false promises made in the form of its conduct in connection with the
14 implied-in-fact contract); (ii) breach of the Yucaipa/Lantern Deal (or, in the alternative, breach of the
15 implied-in-fact contract); and (iii) intentional misrepresentations.
16 125. As a direct and proximate result of Lantern’s unlawful and unfair acts, Yucaipa has
17 suffered injury to its business, including irreparable harm to its goodwill, reputation, and business.
18 Lantern’s illegal actions have also caused actual and consequential damages, including, but not
19 limited to, the expenditure of resources and money necessary to provide Lantern with continued
20 access to Yucaipa Confidential Information and lost investment opportunities in the entertainment
21 industry. Yucaipa has no adequate remedy at law and will suffer further injury and damage unless
22 such wrongful conduct is enjoined.
23 126. Yucaipa therefore seeks an injunction pursuant to California Business & Professions
24 Code § 17203 prohibiting Lantern from engaging in unfair and unlawful business practices, including
25 those set forth herein, and remedying the harm Lantern has caused Yucaipa.
26 127. As a direct and proximate result of Lantern’s unlawful and unfair acts, Lantern has
27 further been unjustly enriched in an amount to be determined at trial. Pursuant to Business and
28
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1 Professions Code § 17203, Yucaipa seeks complete restitution from Lantern as a result of its unfair
2 and unlawful acts.
3 ELEVENTH CAUSE OF ACTION
4 Un st Enri h ent
5 A ainst Lantern
8 129. Yucaipa conferred a benefit on Lantern by agreeing to share the Yucaipa Confidential
9 Information, which information Yucaipa spent millions of dollars to acquire and amass.
10 130. Yucaipa conferred these benefits on Lantern at Lantern’s request and based upon
11 Lantern’s promises, representations, and omissions.
12 131. Lantern accepted, retained, and used the benefits that Yucaipa conferred upon Lantern
13 (i.e., the Yucaipa Confidential Information), saving Lantern millions of dollars in fees and expenses
14 and enabling Lantern to successfully acquire the TWC assets in the TWC bankruptcy.
15 132. Lantern has not compensated Yucaipa for these benefits.
16 133. Lantern thus has been unjustly enriched at Yucaipa’s expense and therefore must
17 make restitution to Yucaipa for an amount to be proven at trial.
18 T ELFTH CAUSE OF ACTION
19 ant Mer it
20 A ainst Lantern
23 135. Lantern requested that Yucaipa share the Yucaipa Confidential Information for the
24 purpose of facilitating the Lantern Bid.
25 136. Even though it had no obligation to do so under the Confidentiality Agreement,
26 Yucaipa provided Lantern with access to the Yucaipa Confidential Information at Lantern’s request
27 based upon Lantern’s promises, representations, and omissions.
28 137. Lantern has not compensated Yucaipa for the Yucaipa Confidential Information.
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1 138. Lantern thus has been unjustly enriched at Yucaipa’s expense and Yucaipa is entitled
2 to be compensated in an amount to be determined at trial.
3 THIRTEENTH CAUSE OF ACTION
4 Brea h o the Covenant o Goo Faith an Fair Dea in
5 A ainst Lantern
8 140. There is a covenant of good faith and fair dealing implied in every contract. This
9 implied covenant requires each contracting party to refrain from doing anything to injure the rights of
10 the other to receive the benefits of the agreement.
11 141. Lantern breached the covenant of good faith and fair dealing implied in the
12 Confidentiality Agreement by, among other things, using the Yucaipa Confidential Information to
13 prepare the Lantern Bid.
14 142. As a direct and proximate result of Lantern’s breach of its obligations, Yucaipa has
15 suffered millions of dollars in damages.
16 FOURTEENTH CAUSE OF ACTION
17 Brea h o the Covenant o Goo Faith an Fair Dea in
18 A ainst Lantern
21 144. There is a covenant of good faith and fair dealing implied in every contract. This
22 implied covenant requires each contracting party to refrain from doing anything to injure the rights of
23 the other to receive the benefits of the agreement.
24 145. Lantern breached the covenant of good faith and fair dealing implied in the
25 Yucaipa/Lantern Deal by, among other things, using the Yucaipa Confidential Information to prepare
26 the Lantern Bid without disclosing to Yucaipa that Lantern did not intend to honor its obligations
27 under the Yucaipa/Lantern Deal.
28
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1 146. As a direct and proximate result of Lantern’s breach of its obligations, Yucaipa has
2 suffered millions of dollars in damages.
3 FIFTEENTH CAUSE OF ACTION
4 De arator Re ie
5 A ainst Lantern
8 148. Declaratory relief is appropriate in this action because the rights, duties, and
9 obligations of Lantern and Yucaipa are at issue.
10 149. An actual controversy has arisen and now exists between Lantern and Yucaipa
11 concerning their respective rights and obligations under the Confidentiality Agreement. Specifically,
12 Yucaipa asserts that it had no legal obligation under the Confidentiality Agreement to share the
13 Yucaipa Confidential Information with Lantern for the purpose of facilitating the Lantern Bid, and
14 Lantern had a legal obligation under the Confidentiality Agreement not to use the Yucaipa
15 Confidential Information for the purpose of facilitating the Lantern Bid.
16 150. Yucaipa desires a judicial determination regarding the parties’ respective rights and
17 obligations under the Confidentiality Agreement, including that it had no legal obligation under the
18 Confidentiality Agreement to share the Yucaipa Confidential Information with Lantern for the
19 purpose of facilitating the Lantern Bid, and Lantern had a legal obligation under the Confidentiality
20 Agreement not to use the Yucaipa Confidential Information for the purpose of facilitating the Lantern
21 Bid.
22 151. A judicial determination is necessary and appropriate at this time in order for Yucaipa
23 to ascertain its rights and obligations, and those of Lantern, with respect to the Confidentiality
24 Agreement. At this time, Lantern continues to deny it breached the Confidentiality Agreement.
25
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27
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1 SI TEENTH CAUSE OF ACTION
2 De arator Re ie
3 A ainst Lantern
6 153. Declaratory relief is appropriate in this action because the rights, duties, and
7 obligations of Lantern and Yucaipa are at issue.
8 154. An actual controversy has arisen and now exists between Lantern and Yucaipa
9 concerning their respective rights and obligations under the Lantern/Yucaipa Deal. Specifically,
10 Yucaipa asserts that Lantern has a legal obligation under the Lantern/Yucaipa Deal to pay Yucaipa
11 the transaction fee, to reimburse Yucaipa’s costs and expenses, to allow Yucaipa to contribute to the
12 Lantern investment vehicle its and its affiliates’ preexisting financial interest in TWC in return for an
13 equivalent equity interest, and to provide Yucaipa the option to invest up to 50 million of additional
14 capital in the Lantern acquisition vehicle.
15 155. Yucaipa desires a judicial determination regarding the parties’ respective rights and
16 obligations under the Lantern/Yucaipa Deal, including that Lantern has a legal obligation under the
17 Lantern/Yucaipa Deal to pay Yucaipa the transaction fee, to reimburse Yucaipa’s costs and expenses,
18 to allow Yucaipa to contribute to the Lantern investment vehicle its and its affiliates’ preexisting
19 financial interest in TWC in return for an equivalent equity interest, and to allow Yucaipa the option
20 to invest up to 50 million of additional capital in the Lantern acquisition vehicle.
21 156. A judicial determination is necessary and appropriate at this time in order for Yucaipa
22 to ascertain its rights and obligations, and those of Lantern, with respect to the Lantern/Yucaipa Deal.
23 At this time, Lantern continues to refuse to comply with its obligations under the Lantern/Yucaipa
24 Deal.
25 PRAYER FOR RELIEF
26 HEREFORE, Yucaipa prays for the following relief:
27 1. Actual, incidental, and consequential damages to compensate Yucaipa for the
28 economic harm and injury suffered as a result of Defendants’ breaches and broken promises;
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1 2. Punitive damages sufficient to penalize Defendants for engaging in fraudulent conduct
2 and deter future fraudulent conduct;
3 3. Restitution of all benefits Defendants improperly obtained, directly or indirectly, from
4 Yucaipa, as well as disgorgement of the proceeds of Defendants’ wrongful conduct;
5 4. An award of specific performance and/or appropriate injunctive relief against Lantern
6 Asset Management GP, LLC, pursuant to section 6 of the Confidentiality Agreement, preventing
7 Lantern Asset Management GP, LLC from selling, hypothecating, pledging, or disposing of any
8 interest in the entity that purchases the TWC assets;
9 5. A judicial declaration that Lantern is obligated to pay Yucaipa the transaction fee, to
10 allow Yucaipa to contribute to the Lantern investment vehicle its and its affiliates’ preexisting
11 financial interest in TWC in return for an equivalent equity interest in the Lantern acquisition vehicle,
12 to allow Yucaipa to invest up to 50 million in the Lantern acquisition vehicle, and to reimburse
13 Yucaipa’s costs and expenses;
14 6. Injunctive relief, including an order prohibiting Defendants from engaging in wrongful
15 conduct described herein and remedying the harm caused by Defendants’ conduct;
16 7. Attorneys’ fees, costs, and expenses incurred in connection with this action; and
17 8. Such other and further relief as this Court may deem just and proper is appropriately
18 awarded.
19 DEMAND FOR JURY TRIAL
20 Plaintiff hereby demands a trial by jury on all matters so triable.
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1 DATED: May 1, 2019
2 GIBSON, DUNN & CRUTCHER LLP
ROBERT KLYMAN
3 PERLETTE MICHÈLE JURA
SHANNON MADER
4 MATTHEW T. SESSIONS
5
6 By:
Perlette Michèle Jura
7
Attorneys for Plaintiff
8 THE YUCAIPA COMPANIES, LLC
103266377.28
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Yucapia V Lantern Proposed SAC

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E HIBIT A

Proposed Second Amended Complaint

SECOND AMENDED COMPLAINT

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